For many couples, diverging views on investing run deep

Barbara Stewart, a financial author and researcher in Toronto, didn’t know what her husband invested in until a few weeks ago. The two had come to their second marriage as financially independent adults with separate online trading accounts and investment strategies. Living separate financial lives seemed to work for them.

Also, as chartered financial analysts, talking about their own investments felt like bringing their work home, she admits.

But when Ms. Stewart cashed in an investment at the perfect moment early in May, that win prompted a discussion about investing and money management with her husband. “I told him the five [exchange-traded funds] I hold and why – and he was like, ‘I have exactly the same portfolio!’ The same everything. It was bizarre,” she says.

Thinking back on that moment, Ms. Stewart chalks up the coincidence to their training, knowledge and decades of experience – or just a complete fluke – but either way, absolute investment synergy between couples is rare.

Most spouses tend to have different strategies and styles. One might enjoy aggressive investing while the other holds back. Or one is interested in socially responsible stocks, while the other is heavy on oil, gas and – gasp – coal.

Sandi Martin, partner and certified financial planner at Spring Financial Planning in Gravenhurst, Ont., says she sees divergent styles frequently and isn’t surprised by how often the issue comes up, especially for couples on their second or third marriages.

“So much of our investment strategy comes from our life experience, and if you join later in life with a different money experience and family history, you’re merging not just a cold calculation on a spreadsheet,” she says. “You’re trying to accommodate that whole messy thing that comes with being human.”

For many couples, diverging views about retirement planning run even deeper than whether it’s smarter to plunk money in a guaranteed investment certificate (GIC) instead of a small-cap stock. According to a 2018 Fidelity Investments survey in the United States, more than half of couples didn’t agree on how much money they needed to save for retirement and more than four in 10 had opposing views on the best retirement age.

Ms. Stewart recently sat down with a couple who were on the verge of having a major disagreement. The husband wanted to maximize the return on their portfolio so they could leave as much money as possible for their children. His wife wanted to spend the money within her lifetime and have some fun herself.

In the end, Ms. Stewart drafted a full financial plan for the couple, talking them through the decisions and expectations they had for the money. And her clients understood each other’s motivations better. Eventually, they arrived at a compromise: One of the woman’s retirement accounts was invested conservatively, but it was set up so she could spend and take an income. Her husband was allowed to save more to give the extra money to their children someday.

That kind of intense communication might be a marriage saver, according to a 2018 PolicyGenius study. It reported that of the couples who managed their money separately, one in five stated they planned to leave their partner over financial trouble. Only four per cent of couples who manage their money together said they were ready to jump ship for the same reason.

One danger of separate investment strategies is that they might cancel each other out, Ms. Martin says. One person might think they are safe and secure investing in fixed-income products such as GICs, while the other has 70 per cent of their investments in higher-risk equities.

“They don’t have the whole picture. The pieces work against each other,” she explains.

Or, investors are throwing their money away on fees for too-similar investments. “It is almost universal for people with a certain level of assets to have some kind of duplication when you actually look at the whole portfolio together.”

To cut away that dead wood, Ms. Stewart says she likes to begin at square one with couples. She asks them what rate of return they’re after and the reasons for which they’ll need the money. They then consider liquidity requirements, time horizons and risk tolerance.

Their old portfolios are stored away until it’s time to compare what the couple owns now with what they need for retirement later. Her job, she says, is to explain where they have gaps and how to fill them so the investment strategy is more cohesive.

“If you do it that way, then it’s not about who’s right and who’s wrong. It’s about what makes sense for their professional financial and investment plan,” she says.

Matthew Ardrey, vice-president and wealth advisor at TriDelta Financial Partners in Toronto, an investment-counselling firm, says “compromise” is the magic word in these situations.

“Most good marriages have an element of compromise in them, and this is no different,” he explains. For his high-net-worth clients, for example, the magic bullet that helps keep couples headed in the same direction without causing strife is alternative investments.

That is, private debt, bridge loans or other secured loans. These investments aren’t correlated with the stock market and can offer good returns. They are a reasonable option for couples who want low-risk investments on one side and higher returns on the other.

“Oftentimes you get one person who is more aggressive and the other one is more conservative,” Mr. Ardrey says. “But if you can get them to meet in the middle, that’s probably where their portfolio needs to be at the time anyway."